Hi Ron,
Yes, you need to use a Jam Nut, which are about half the thickness of a standard nut.
The pinion gear should bolt on flush. That pinion gear is garbage. Wayne Mahaffey has new ones available.
The threads on the flywheel should be 1/4-20, but they looked like someone may have drilled them out. Check out this thread for how I like to make a repair.
https://simplexservi-cycle.com/index.php?topic=1528.msg14028#msg14028The proper stud for the flywheel is 1/4-20 in the flywheel to 1/4-28 on the other end of the stud. Wayne will also have those studs.
If you need the procedure to remove the flywheel, it can be found on the site.